BEIJING, March 21 (Reuters) - China slashed its crude oil
imports from Iran by half in February from December levels to
pressure Tehran in a contract dispute, while increasing its
purchases from Iran's rival Saudi Arabia to a record level to
fill the gap.

February was the first month to reflect the full scale of
the cuts in China's imports of Iranian oil after top refiner
Sinopec Corp decided in December to chop purchases in
an attempt to force Iranians to back off from the tougher terms
they had proposed for the 2012 contract.

The February imports at about 290,000 barrels per day are
about half of December's 572,800 bpd, 41 percent less than the
January level and down 40 percent from February 2011, data from
China General Administration of Customs showed on Wednesday,
largely matching earlier Reuters reports.

The sharp drop in Chinese imports adds to trade pressures on
Iran stemming from U.S. and European Union sanctions over its
nuclear enrichment programme. The West fears it could lead to
nuclear weapons, while Iran says it is intended for power
generation.

The United States on Tuesday exempted Japan and 10 EU
nations from financial sanctions, because they have
significantly cut purchases of Iranian crude. But it left Iran's
top customers China and India exposed to the possibility of such
steps.

The 491,000 bpd level recorded for January factored in a
small part of the planned cuts because of the delay due to the
roughly three-week tanker voyage between Iran and Chinese ports.

RECORD SAUDI IMPORTS

China boosted imports from Saudi Arabia, the only big oil
producer with a significant amount of spare capacity, to a
record 1.39 million bpd in February, 260,000 bpd higher than
January and nearly 40 percent above the year-earlier level.

Saudi oil minister Ali al-Naimi said the kingdom had met all
its customer's requests for oil and stood ready to raise output
to full capacity of 12.5 million bpd, if needed.

"My only mission is to convey to you that there is no supply
shortage in the market," Naimi told reporters on Tuesday. "We
are ready and willing to put more oil on the market, but you
need a buyer."

China's record Saudi imports are also largely in line with
comments from industry sources that the world's top oil exporter
had been sending some 200,000 bpd of extra oil to Asia, the bulk
of which was destined for China.

Riyadh has also quietly raised shipments to the United
States to the highest level since mid-2008.

Sinopec reduced Iranian imports for lifting through the
first quarter of this year to protest tougher payment terms and
higher prices proposed by Tehran, Reuters has reported.

Under an annual contract that concluded in late February
after nearly three months of talks, China will buy 10 to 15
percent less crude from Iran this year versus 2011, with the
cuts mostly already made in the first three months, a
Beijing-based Chinese oil executive with direct knowledge of the
deal told Reuters.

The sharp scale-back in February knocked Iran's ranking to
China's seventh-biggest supplier from third-biggest last year.

China, the world's second-largest oil consumer, is Iran's
largest trading partner and biggest oil client, buying up to 20
percent of the Islamic Republic's total crude exports.

IRAQ, UAE, KUWAIT, RUSSIA

China has been scouring the world for crude to make up for
the lost Iranian oil. Its extra imports in February from Saudi
Arabia, other Middle East countries and Russia more than offset
the loss of imports from Iran, the data showed.

Imports from Iraq jumped 135 percent year-on-year to 473,634
bpd and were up 26 percent from the level of imports in January,
the data showed.

Crude imports from other Gulf countries also rallied, with
those from Kuwait up nearly 50 percent on the year to 242,092
bpd and from United Arab Emirates up 45 percent to 195,707 bpd.

Imports from Russia were 602,714 bpd in February, 3.6
percent higher than in January and 52 percent higher versus
February 2011.

Crude imports from Sudan, however, fell nearly 60 percent
from a year earlier to 164,238 bpd, the data showed, after South
Sudan in January stopped production in a row over transit fees
with Sudan.